UPDATE: Bank of America Initiates Noodles & Co. at Neutral on Valuation

In a report published Tuesday, Bank of America analyst Joseph T. Buckley initiated coverage on Noodles & Co. NDLS with a Neutral rating and $48.00 price target.

In the report, Bank of America noted, “We are initiating coverage of NDLS shares with a Neutral rating and a $48 price objective. NDLS shares began trading on June 28th following an initial public offering (IPO) at $18 per share. The stock has appreciated significantly from the IPO price and is trading at about 80x our 2014 EPS estimate. Our price objective of $48 reflects a significant premium valuation of 90x our 2014 EPS estimate supported by Noodles strong potential for long term earnings growth at a 25% rate in the quick casual restaurant sector as well as the propensity of well-received IPO's to trade up even from seemingly elevated early post-deal levels. NDLS valuation is skewed up by the long runway for growth from roughly 350 restaurants to the long term potential for 2,500 restaurants.”

Noodles & Co. closed on Monday at $42.12.